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Archive for the ‘Systematic Innovation’ Category

Mastering project selection – which project should I choose?

Thursday, June 14th, 2018

Which project is ‘best’?

A key challenge in any innovation programme – be it creating a pipeline of new product proposals, selecting service/process re-engineering projects or deciding how best to allocate budget across multiple project proposals – is how to determine which projects are ‘best’ and therefore which to select. Managers are often faced with several possible projects and have to choose which to back, long before there is enough information to build a conventional business plan.

Once a project proposal is sufficiently developed to include details of planned implementation, financial evaluation methods such as Net Present Value (NPV) can be applied. But for projects at earlier concept stages, over-reliance on strictly financial criteria may lead to wrong decisions, simply because financial data are often wrong” – the words of Bob Cooper, who developed the stage-gate model for new product development. At this stage it can be tempting to simply fall back on intuition and previous experience but a better approach is to assess projects against a number of criteria which are pointers to likely success.

Read the full paper by Rick Mitchell & Alastair Ross:

Mastering project selection – Codexx whitepaper – June 2018

How’s your innovation health?

Thursday, January 11th, 2018

Innovation is increasingly a critical competency for all businesses – in today’s global, dynamic markets. But many businesses lack effective capabilities in innovation. Our latest video on our YouTube channel looks at innovation challenges and the use of ‘best practice’ assessment to drive innovation improvement. We also overview the use of the Codexx ‘Foundations for Innovation’ (F4i) assessment solution – developed in 2006 with the support of John Bessant, then Professor for Innovation at Imperial College Business School in London. And we do all this with a light sprinkling of humour…. and why not?

Take a look:

Why’s your innovation engine misfiring?

Wednesday, November 29th, 2017

Innovation is increasingly critical to business survival

We live in times of major change driven by a combination of globalisation, rapid technology development, the accelerating impact of the internet as a platform for social and business collaboration, security threats and changes in the power balance between the East and West.

The result is a turbulent environment where businesses continually need to adapt their business models and value propositions to meet new competitive conditions. In this challenging environment the ability to effectively innovate is becoming a core competence for businesses seeking to prosper in the short term and survive in the longer term.

How do you ensure that your innovation system is up to the job?

And and if it isn’t, how do you improve it?

Our latest whitepaper tells you how – you can read it here:

Why’s your innovation engine misfiring?

Innovating value for global markets – Institute of Export event

Wednesday, June 7th, 2017

Institute of Export logo

Alastair Ross, Director of Codexx, is presenting at the Institute of Export and International Trade event on Thursday 6th July 2017 – ‘Blueprint for Global Britain’ which is being held at the University of Plymouth.

The event is aimed at businesses in the South West of the UK that are working in international trade. The event will examine the issues and opportunities in accessing new markets and the debate will help to shape the future of international trade.

Alastair Ross will present on ‘Innovating product and service value for global markets‘. His presentation will show how businesses can optimise their product or service proposition for different international markets by assessing the value requirements of users and how they vary by market and geography and then tuning their offering – or providing suitable support services – accordingly. The presentation shares learning based on Codexx innovation projects and makes use of the Value Table model.

For more information on the event: Blueprint for a global Britain.

Value myopia – a business killer

Wednesday, March 15th, 2017

glasses for myopia

It all seems pretty straight forward. A business provides a product or a service that a customer values and in return receives payment for it. Those businesses that provide a higher level of perceived value to customers will gain over those that provide less. This is the foundation of our market-based economy. Businesses use Marketing to understand what customers want, R&D to develop it, Manufacturing to build it and Sales to sell it. Basic stuff taught on any elementary business course.

So why do so many businesses get it wrong? How do they lose sight of the value needs of their customers? In effect they have got lost, guided by ‘value maps’ that no longer match the reality of their customers’ environment. Even large, sophisticated businesses are not immune from this disease. Just think about Nokia, Blackberry and IBM.

 

Lessons from the past – Nokia and Blackberry

Nokia started life in 1865 as a forestry business. Over the next one hundred years its business moved from wellington boots to electronics and military equipment and then in 1982 to mobile phones. By 2005 Nokia dominated the global market for mobile phone handsets with more than one third of the market. Yet only nine years later, in 2014, Nokia exited the mobile phone handset business after losses nearly bankrupted the company.

How did this happen? A key reason was that Nokia failed to successfully respond to a new paradigm in mobile phone handsets created by Apple when it launched its iPhone in 2007. Underlying this was that Nokia’s customer value map no longer matched the reality in the market. Nokia’s mobile phones were effectively based on a ‘radio paradigm’, where signal strength, call quality and battery life were key. However customers increasingly valued internet-based services, multiple applications, a fun and slick user experience wrapped in a slim and well designed package and were prepared to trade battery life and call qualities for these value elements. The iPhone was built on a ‘computer paradigm’ that better matched customers’ new value requirements. Nokia could not adjust its mobile phone business model to meet these new requirements fast enough and ended up leaving the market.

Backberry’s fall from market dominance was as calamitous as Nokia’s – with 41% share of the US market in early 2010 dropping to 1% by mid-2015. Whilst Blackberry was successful in selling to corporate customers, consumers became increasingly frustrated at the devices’ limitations in internet access, lack of Apps and usability compared to the more user-focused smartphones provided by Apple, Samsung and HTC. Trends such as BYOD (Bring Your Own Device) and the success of Apple and Google in providing ‘business-level’ applications on their phones meant that it was the users that drove the move away from Blackberry phones. Despite the new Blackberry 10 operating system introduced in 2013 – arguably a superior operating system to IOS and Android – its lack of application support effectively killed it. Blackberry was unable to establish an App ecosystem with sufficient critical mass to provide the required functional value demanded by customers.

 

IBM’s transformation – realising a new map of customer value

IBM successfully managed to realign its value proposition and business model to the needs of its customers – after a serious misalignment became apparent in the early 1990s. Customers were abandoning it for faster, more nimble competitors. Between 1991 and 1993, IBM lost a massive $16 billion. The core reason for IBM’s difficulties was that the IT market was changing and IBM’s value proposition had not. New developments such as personal computing, mobile telephony, integrated software solutions and the internet were moving IT beyond its traditional focus of the IT Data Centre to a strategic business issue.

As a result decision-making for selection and investment in IT was evolving from IT Management to business functions such as Marketing and Operations. IBM’s sales force did not have relationships with these decision makers, Management Consulting firms did and provided strategic guidance on IT issues. Some of these consultants, such as CSC and Accenture were also IT outsourcing companies. Outsourcing of IT meant that other IT providers, such as IBM, would become commoditised as hardware and software suppliers to the outsourcer and their influence and profit margins significantly reduced.

Through a major transformation programme IBM was able to realign its business model to match the new value requirements of its customers. Those value requirements were for an integrated service-based offering that reduced the risks and cost of ownership of IT for customers through consulting and outsourcing offerings. Building the new business model to deliver this was a ten year journey and IBM’s business changed from one where services accounted for 9% of revenue in 1991 to one where services accounted for 40% of revenue in 2001.

So how can businesses avoid the onset of ‘value myopia’ and ensure that their ‘customer value map’ matches what is happening in reality in their customers’ environment?

 

An accurate map of customer value

Here are three key guidelines to help ensure an accurate map of customer value:

1.     Always consider value from the customer’s perspective. Particularly the relative weighting of value elements such as functionality, experience, cost and quality, which vary by customer and the situation that prevails at the point of purchase or use.

2.     Customer and User insight is critical in developing the customer value map.This requires deep understanding of customers and users, their wants and needs. Approaches such as Anthropology, Lead Users and Co-Development are powerful in enabling this insight.

3.     Use structured and responsive methods for developing new and enhanced value propositions to ensure that value innovation improves the fit with how customer and user needs are changing. Techniques such as QFD, Value Analysis and Conjoint Analysis allow a detailed and holistic map of customer value needs to be created. Approaches such as Lean Start-up allow new propositions to be quickly developed and tested – reducing the risk of value misalignment with customer needs. By identifying trends in how customer value requirements are changing, businesses can get early notice of required changes in their value proposition and business model

Businesses need to recognise the ease and danger of a disconnect developing between their value propositions and user wants and needs which are by nature dynamic. They need to continually review and update their ‘value maps’ to ensure they match customer reality.

_______________________________________________________

Front cover with border for LinkedIn - SMALLFurther information on value mapping can be found in Alastair Ross’s new book ‘Sowing the seeds of business transformation’ and available in paperback on Amazon.

(A version of this article was published on LinkedIn Pulse on February 21, 2017).

 _____________________________________________________

Redesigning legal services – lessons learned 2005-16

Friday, January 6th, 2017

Law firm re-engineering

Law firms are facing increasing business challenges due to the impact of globalisation, clients wanting ‘more for less’, deregulation and of course the impact of Information Technology and the Internet.

These challenges have driven progressive law firms to seek to improve their competitiveness by redesigning their services and support processes to improve the value delivered to clients and also the efficiency with which services are delivered.

Our new whitepaper explores the redesign of legal services – the reasons firms take this step, the approach used, the challenges faced and the benefits realised – using our experience gained in redesigning 20 legal services and processes for major English law firms between 2005-16.

Read it here: redesigning-legal-services-codexx-whitepaper-january-2017

 

 

Legal tech frenzy – lessons from industry

Friday, November 18th, 2016

http://www.dreamstime.com/royalty-free-stock-images-man-working-modern-technology-image22891879The legal geek moves centre stage
There has been an explosion of interest in information technology in the legal sector of late – particularly technology at the leading edge such as Artificial Intelligence (AI). This interest was crystallised in the recent and well publicised ‘Legal Geek’ conference in London when a number of major law firms mingled with ‘LawTech’ companies and startups to discuss how new information technologies and new thinking could be used to transform ways of providing legal services. As well as AI and technologies such as blockchain the conference looked at ‘softer’ elements such as innovation and cultural change.

New thinking

This is a significant development in a business sector that has long been conservative and behind other sectors in its application of new business thinking and technology. It comes as many firms law struggle to maintain their levels of profitability in market conditions that have been challenging since the 2008 financial crash. The combination of price-focused clients, globalisation, the internet (and market deregulation in the UK) has driven law firms to seek to innovate in the services they provide and the ways they work.

Law firms typically have applied IT for legal research, case and document management and for the management of support activities such as time recording, billing and finance. This new wave of IT brings internet-based technologies and – what typically makes the press – Artificial Intelligence (AI) systems. The application of these new technologies promises to revolutionalise the way law is provided – for the benefit of law firms who can work more efficiently and effectively – and for the benefit of clients who will receive ‘more for less’. The implementation of these technologies will – over time – help in digitizing key elements of legal services – making law more affordable and accessible to the large unmet market of small businesses and individuals.

Deja vu? Lessons from industry

Having worked for the last decade in helping major UK law firms transform their services through re-engineering and innovation – and also one who has consulted to multiple business sectors for twenty-five years – I am feeling a sense of deja vu.

In the 1990s, the industrial sector was in the midst of an ERP frenzy – implementing new Enterprise Resource Planning systems such as SAP and Oracle to transform the efficiency of their business operations. In the late 1990s and into the 2000s, the next wave of technology looked outwards into SCM (Supply Chain Management) and CRM (Customer Relationship Management) – to better link business with their suppliers and customers. In both these ‘tech frenzies’, many companies suffered from implementation programmes that significantly overran their budget and plan and failed to achieve their business goals.

The root cause of many of these problems was the lack of an holistic and integrated approach to implementing these technologies as business transformation programmes, not simply as technology projects. The lessons learned were that there were key success factors for IT exploitation, particularly:

1. A vision & strategy are required for effective communication within the business, getting buy-in from key stakeholders and coordinating the resources and activities.

2. To get the best out of the IT, business processes need to be re-engineered first (to avoid the all-too-common ‘pig in lipstick’ outcome).

3. Effective programme management is required for effective coordination of IT, process and people work-streams.

4. Change management is fundamental to effectively deploying the new technology and working methods into daily business.

Are law firms grasping for a silver bullet?

New technology can often be an attractive ‘silver bullet’ for management teams faced with major business challenges. It appears as a nice ‘clean’ solution to a firm’s problems – as compared to complex messy process and organisational-based improvements. For this reason many businesses have wasted money and sub-optimised the impact of their technology investments by not ‘preparing the ground first’ with re-engineering and restructuring work.

We should also be clear that those law firms currently looking to apply new IT such as AI systems, are typically larger firms – the ‘Top 50’ in the UK – not the other 10,433 firms*. These are the wealthier and more sophisticated firms.

However in my re-engineering work with these larger firms in the last decade, it is clear that their services and processes have much opportunity for improvement. Re-engineering projects have typically yielded 25-50% cost reduction – whilst improving service quality – without the application of any new technology.

These services simply were not designed or operated in a systematic and efficient way. Automating them without re-engineering them first would significantly reduce the benefits from IT investment. Indeed for smaller firms lacking the capital or the resources for major IT investment, internal re-engineering work would be a better approach  for now – then later exploit the use of these new technologies when prices have reduced and functionality improved.

Structured evaluation and execution

So law firms should look outside their sector and seek to learn from others’ experience on how best to truly transform their businesses by exploiting new technologies and thinking. They should strategically evaluate – and incubate – these new technologies to determine how they can be used to re-fashion their value proposition and their business model. They should prepare the way by first systemising their services and processes. And they should manage the implementation of these new technologies as an holistic programme.

 

For more information on law firm innovation, see ‘Innovating professional services – transforming value and efficiency’ by Alastair Ross, published in May 2015 by Gower.

* There are 10,483 law firms registered in England and Wales in September 2016 according to the Solicitors Regulation Authority.

Director’s blog: Can you really train people to be innovators?

Wednesday, May 25th, 2016

the director's blog on innovation - logo with text

More innovation please

Raising the level of innovation is becoming a critical need for businesses as they face increasing competitive pressures. A fundamental requirement for making businesses more innovative – in what they provide to their customers and how they do so – is to get their managers and employees engaged and able to effectively participate in innovation activities. This requires an internal system for innovation that establishes key elements of enabling innovation infrastructure such as strategy, processes, tools and supporting resources. And part of this work involves training managers and employees in innovation.

But can you really train people to be innovators?

I ask this question, as there is a view – and not an uncommon one – that innovators are born not made: “Just look at Steve Jobs, James Dyson or Jeff Bezos – they weren’t trained to make them the innovators they are!” Implicit in this view is the belief that when it comes to innovation ‘you’ve either got it or you haven’t’. If that’s the case then what hope is there for businesses trying to innovate if they don’t happen to have a Jobs, Dyson, Bezos or the like in their midst….?

Innovation is not just creativity

Let’s step back and review a few innovation basics: Firstly, people often mix up innovation and creativity. Creativity is about generating ideas. Innovation is about creating value from ideas. Ideas on their own have no value – only potential value which has to be realised. Certainly some people are naturally more creative than others and thus more likely to generate potentially valuable ideas. But being creative alone is not enough – we also need the skills to realise the ideas and transform them into value. That requires skills in idea exploration and analysis, development of new offerings and methods, project management, marketing and selling (internally and externally) for example. And ideas can be effectively generated by (less creative) people working systematically anyway (through effective brainstorming and other ideation methods). So innovation requires a mix of capabilities, not just creativity.

Not only a lone genius required

When talking about improving innovation in an organisation it’s important to remember that the goal should be to ‘institutionalise’ innovation – to enable regular and sustained innovation through widespread and integrated efforts – rather than the occasional spark of innovation enabled by a few individuals (who can have off days or can leave). People forget that Apple’s innovation success with its iPod, iPhone and iPad was the result of multiple innovations by many individuals with Steve Jobs being the orchestrator and very much the public face, but by no means the sole innovator – and indeed his orchestration was ineffective and inefficient at times (read the excellent biography ‘Steve Jobs’ by Walter Isaacson for details).

One of the earliest examples of effective institutional innovation was the Menlo Park laboratories established by Thomas Edison in 1876. This was one of the first large-scale research establishments and formed the template for R&D organisations for the next fifty years. Edison brought together more than 200 talented scientists, engineers and craftsman and overlaid a system of innovation that harnessed their skills in a structured and productive way with defined teams, extensive experimentation and record keeping. It was a highly productive operation and created more than 400 patents. Whilst Edison was very much the public face of innovation, it was very much an institutional rather than individual approach to innovation, with defined targets such as ‘a minor innovation every 10 days and a big thing every six months or so’.

Most innovation is doing existing things better

A more modern example in a services firm is that of AXA Insurance in Ireland which started up an innovation programme in 2000. Theirs was very much an experimental approach, learning as they went along. They found that they could generate lots of new ideas from their employees but they needed to apply a process to effectively screen and select the best ideas. One key insight was when they analysed the ideas implemented in their first few years of the programme they found that 80% of them were concerned with removing waste or improving existing services or ways of working. Only 10% were ideas for new innovative services. This finding helped demystify innovation in the business – employees realised that most innovation was in doing existing things better – incremental innovation – which they could certainly do in their daily work. That is a powerful message for all businesses: Don’t just look for the ‘silver bullets’ of radical innovation, spend most of your time removing the ‘rust and grime’ from your existing methods and processes and then ‘polish them’ to make them more effective. Industrial experience of Continuous Improvement, making use of basic techniques for measurement, analysis and waste elimination – often within a Lean programme – has shown the power of such ‘do better’ innovation. Training employees in these core techniques can make them more structured and effective in their work on process innovation.

So you can train people to become innovators?

You can indeed train people to be effective in ‘do better’ or incremental innovation – which accounts for the vast majority of innovation. But what about ‘do different’ radical innovation? This type of innovation is needed if a firm wants to leap ahead of rivals. And firms would certainly want a few silver bullets as part of their innovation armoury…

To help answer this question I’m going to use the example of the UK legal sector. Most observers would not consider law to be a natural environment for innovation and rather unkindly might jest that ‘lawyer’ and ‘innovative’ are two words never found in the same sentence… That might well have been true(ish) twenty years ago, but it’s a viewpoint that is increasingly out of date today. For the UK legal sector has been in a state of major change for the last decade, driven by a combination of deregulation, tougher market conditions driven by the economic fallout from the 2008 financial crash, and the increasing impact of the internet. The result is clients ‘wanting more for less’, new rivals, internet-enabled entrants and law firms recognising the need for major changes in both their offerings and their working methods. Many have embraced innovation in their services – often with a primary goal of efficiency and cost improvement.

Through Codexx I have worked with a good number of major UK law firms helping them to respond to these major challenges by applying innovation. This has taken the form of two different types of interventions:

  • Specific service innovation (aka ‘re-engineering’)
  • Improving a firm’s innovation capabilities

Service innovation – a focused environment for innovation

In my work with law firms since 2006 I have helped law firms re-engineer a total of 20 legal services using a Codexx approach called ‘Smarter Working’. This approach uses a small core team of fee earners and support staff to perform the re-engineering with the support of the Codexx consultant. We effectively establish a ‘micro innovation environment’ using collaborative workshops and with training in team-working, some basic Lean principles and creative idea generation methods. This has resulted in major redesign of services such as Commercial Due Diligence, Inquest and Clinical Negligence, to reduce costs by as much as 75% whilst improving service quality. It has also resulted in the development of new internet-enabled services. Looking back at this work over the last decade I can unequivocally say that you can train lawyers – or indeed any other employees – to be very effective innovators within a supportive environment for innovation.

Improving innovation capabilities

Other law firms have wanted to take a broader approach, not just focused on selected services, but to make their firms ‘more innovative’. Their goal was a firm that used sustained innovation to improve its services, its efficiency and thus its competitive differentiation and its attraction as a place to work for progressive lawyers. To help them do this I have applied Codexx methods and tools to help them establish a systematic approach to innovation and use this to drive innovation of new and improved services and working methods. This work included strategy development, an innovation process & support structure, change management and of course training for selected personnel.

From my experience a key strategic approach to establishing innovation on a firm-wide basis is to run two parallel missions: the first to build the required innovation system and the second to deliver innovation outcomes (e.g. improvements, enhanced services etc.). The first mission is key to long term innovation success; the second is key to delivering benefits early and to help gain buy-in through demonstrable early success. I have delivered training on innovation to selected personnel in a number of firms (often innovation ‘champions’ whose role is to spearhead innovation activities) and typically found lawyers receptive and able to effectively apply the new methods – generating both incremental and more radical ideas. Based on this, there is no doubt in my mind that these lawyers and support personnel can be very effective in catalysing and supporting innovation within their firm.

That is of course if they are given the ‘space’ for innovation.

The one proviso – space for innovation

So you can indeed train people to be capable of innovation. But they can only subsequently realise that capability and successfully innovate if the organisation allows them space to do so. ‘Space for innovation’ covers a number of key attributes:

  • Leadership supportive of innovation – not just focusing on today’s business
  • Time available for work on innovation – always a challenge for people busy running the daily business
  • A wide, but defined, frame to seek innovation in – innovation in a vacuum is rarely effective…
  • A supportive culture for innovation – valuing effort and recognising some failures as inevitable
  • Resources to support innovation (such as other personnel, methods, tools and budget)

Unfortunately these are not always put in place or sustained to accompany training for innovation – and then all the teaching in the world on innovation will have as much effect as trying to light a fire on boggy ground….

Alastair Ross

Director
Codexx Associates Ltd

Further reading

To read further about Thomas Edison’s approach to innovation and the Menlo Park research organisation, see a delightful and informative book on innovation: ‘Innovation – a very short introduction’ by Mark Dodgson and David Gann, published by Oxford University Press.

For more information on the AXA Ireland case study and effective approaches to innovation in knowledge intensive service firms  see ‘Innovating professional services – transforming value and efficiency’ published by Gower. https://www.routledge.com/products/9781472427915

For a case study on law firm re-engineering see: http://www.codexx.com/2015/a-story-of-law-firm-re-engineering-people-processes-profit/

 

Business as unusual – innovating professional services – 7

Monday, December 21st, 2015

Professional Service innovation blackboard

by Alastair Ross, Director, Codexx Associates Ltd

Part 7. Key challenges and sustaining innovation

Introduction

This is the last in a series of seven articles on professional service innovation. The objective of the series is to provide a basic introduction to innovation management for managers, partners and change agents working in professional service firms. This final article reviews the key challenges that professional service firms will face in establishing, accelerating and sustaining an innovation programme and some of the approaches that can be used to address them. To read the first article in the series go here.

Key innovation challenges

In establishing and operating a programme for innovation within a professional services firm, many challenges will be faced, for example:

“Carving out real time for innovation instead of chargeable work is a major challenge…we don’t do enough of it.” Partner, Management Consultancy

Motivation challenge for employees is that chargeable hours win.” Partner, Accountancy

“Innovation does not come naturally to most risk-averse lawyers.” Partner, Law Firm 

“People don’t want to take risky ideas to the boss.” Partner, Management Consultancy

“We’ve been in our functional silos too long and they’re too deep.” Manager, Business Services

“There is lip service to innovation at senior levels due to the difficulty of making the required cultural change.” Partner, Law Firm

These quotes are from clients and a Codexx study in 2012-13 investigating the key challenges encountered by professional service firms in innovation. The study examined 15 predominantly large professional service firms in law, consulting & business services, accounting and insurance. The participating firms were asked to identify their top 5 innovation challenges. The results are shown in Figure 1. A copy of the study report can be found here.

Innovation challenges figure

Fig 1: Innovation challenges in professional service firms (Source: Codexx)

Two of the top three challenges are culture-related issues, each identified by 9 or more of the respondents. The highest challenge was ‘the motivation for employees to innovate’. Firms see that in most cases there is not enough encouragement for employees to innovate. The second highest challenge identified was ‘no/poor innovation process’ – the lack of an effective structured approach for gathering, exploring, selecting and implementing ideas. The third highest challenges was ‘a hostile culture to innovation’ which has some similarity to the highest challenge, the difference being that the first challenge covers a lack of incentive for employees to innovate which covers things like management encouragement and support and reward. This third-ranked challenge identifies an active discouragement for employees and managers to spend time on innovation.

The ‘Other’ category covers a number of other challenges that were identified by respondents. Some of these do overlap with the existing categories, but others capture additional challenges such as the difficulty of managing multiple stakeholders and the issue of functional and departmental silos which can limit the sharing and development of new ideas across the firm.

Innovation system diagram

Figure 2: The innovation system (Source: Codexx)

Addressing key challenges

Establishing and operating an innovation system, covering the 7 practice areas, as outlined in Part 3 of this series and shown in Figure 2, is the most robust approach for dealing with the common challenges faced:

  • Employees will be motivated to participate in innovation activities if there is supportive leadership within the firm and a performance management system that measures and rewards innovation participation. Champions need to be found, to lead projects and help execute required changes.
  • An ideas management process will address the frustrations and inefficiencies that occur when ideas cannot easily be explored, evaluated and selected for implementation in an effective way.
  • A hostile culture for innovation occurs when partners and employees are exclusively focused on today’s business and are effectively penalised when working on innovation (i.e. tomorrow’s business). This can only be addressed by moving the culture to innovation-positive through communication, espoused values in the firm and recognition and reward systems that support it.
  • Innovation needs to be resourced – in a professional service firm this particularly means partner and employee time made available for innovation, some common tools and methods (process mapping, analysis and Lean-enabled improvement for example).
  • Firms need to engage clients in their innovation activities, to gain insight and identify opportunities for enhancing value and to look externally for new ideas and resources.
  • Learning needs to be enhanced in firms, especially to support process-based innovation, with the use of process management and measurement and continuous improvement. Additionally a culture of capturing, sharing and reusing improvements is needed to get innovation beyond the silos of teams and departments and applied across the firm.

Sustaining innovation

Leading a programme to establish sustainable innovation within a professional services firm requires a long term outlook and effective change management. In making change within a partnership it is key to get the support of the majority of partners (unlike a corporate where a board-driven ‘It’s my way or the highway’ approach can be effective). Partners need to recognise that the benefits of the change will outweigh the pain and cost of the journey required. This individual assessment of the pros and cons of change are captured in the ‘change equation’ developed by Beckhard and Harris. This is a simple equation but is powerful in recognising that the viewpoint of change must be both at the personal as well as the organisational level. That is, answering the question from the viewpoint of those key individuals who hold power within the organisation, rather than simply from the viewpoint of the organisation as a whole. This is because it is the perspective of the key decision-makers in an organisation that is critical. The ‘change equation’ states that for successful change:

 

DVP > C

where

D= Dissatisfaction with the status quo

V = Vision of desired future state

P=  Practical Plan to realise the future vision

C = total perceived Cost of change (covering energy, emotional, financial)

(Source: Richard Beckhard and Rubin Harris).

So for someone to be supportive of a proposed change the combination of their dissatisfaction with today’s situation, the attractiveness of the future vision and the proposed plan to realise it must be more compelling than their perception of the cost of making the change. Change leaders need to be able to effectively ‘sell’ the proposed innovation programme at the outset and then continue to sell it during the years it takes to fully establish it within the organisation. This is why measurement and communication of benefits, visible recognition and reward of those effectively leading and participating in innovation activities and establishing innovation behaviours as key to progression in the firm are all key to successfully sustaining the innovation programme.

Summary of the series

The objective of this series was to introduce the key elements of an effective approach for driving and managing innovation in a professional services firm. This is based on my experience of working in Codexx on innovation and re-engineering with major professional service firms over the last decade.

In this series I defined a framework for considering and identifying innovation opportunities, using the ‘innovation dimensions’ model and then gave examples of the four key innovation categories. I then outlined a system to support innovation within a firm, based on 7 key practice areas. In the final two articles I discussed approaches for starting and accelerating innovation within a firm and identified the typical challenges that will be encountered in this journey and key approaches for addressing them.

I won’t pretend that this series will make its readers experts in innovation – that was never the intention! Instead, I hope that readers will have a better appreciation of the opportunities and challenges for applying innovation in professional service firms and to recognise that there are proven approaches to effectively manage innovation so that it can ultimately deliver improved competitiveness for their firms. And from my experience, there is major opportunity for professional service firms to utilise innovation to drive significant improvements in the value provided to clients and the efficiency in which it is delivered.

References and further reading

This article and the others in the series are based on the approaches, references and case studies detailed in my book ‘Innovating professional services – transforming value and efficiency’ published by Gower in May 2015. This is based on the author’s ten years of experience working with professional service firms on innovation projects. It provides in-depth coverage and case studies of the topics featured in this series. For more information go to: http://www.codexx.com/2015/innovating-professional-services-new-book/

Cover-Image

Business as unusual – innovating professional services – 6

Monday, November 30th, 2015

Professional Service innovation blackboard

by Alastair Ross, Director, Codexx Associates Ltd

Part 6. Starting your innovation journey

Introduction

This is the sixth of a series of seven articles on professional service innovation. The objective of the series is to provide a basic introduction to innovation management for managers, partners and change agents working in professional service firms. This article focuses on the approaches for starting or enhancing an innovation programme. To read the first article in the series go here.

Beginning a journey of change

There are a number of ways for a professional service firm to become a measurably more innovative business. There is no one ‘best practice’ way for how a firm should make the journey to realising their own effective innovation system. For that is as much to do with the goals, culture and the leadership of the firm as anything else. However, there are three significantly different approaches that are worth reviewing, as one of them may very well fit with your own firm’s situation and culture. It is important to note that just as an innovation process is drawn as a straight line, but in reality is closer to a lump of spaghetti, so the execution of an innovation programme is rarely clean. Here are three different practical approaches for developing an improved innovation capability in an organisation:

1. Top down strategy

2. Emergent

3. Champion led 

 1. Top down strategy

This is in many ways the classic consultant-advocated approach to innovation, which is logical and structured, putting in place the required ‘infrastructure’ (i.e. process, training, metrics, resourcing etc.) and the conditions (i.e. leadership, cultural changes and new behaviours) – as described in the previous articles – to enable and sustain innovation.

Strengths: This approach will deliver the conditions required for effective and sustainable innovation.

Weaknesses: This approach requires resourcing and will take time to deliver results – the other approaches can be faster to yield initial benefits.

 2. Emergent

The emergent approach offers a pragmatic way to build or enhance a set of innovation capabilities. The trigger will be an existing event (typically external) such as tough business conditions driving the need for efficiency improvements to save cost; or a new requirement from a major client(s) for a dramatic change in a solution(s) value or price; or a business event such as a merger or acquisition.

Strengths: The innovation programme can piggyback on an existing change driver and enable more innovative behaviours and outcomes as a result. The existing change driver helps legitimise the need for innovation, so helps management push through the typical inhibitors to establishing innovation activities in a professional services firm. It can yield faster results than a ‘top down’ approach.

Weaknesses: It is unlikely to be sustainable beyond the short to medium term as the conditions for ongoing innovation have not been put in place and a ‘crisis-driven’ change programme can only run for so long.

3. Champion led

This is an opportunistic approach, which finds potential champions for innovation and then supports and resources them.

Strengths: This can be a fast and effective way for bringing new offerings to market. Individual champions are motivated to make their ideas a success. This can be a low resource approach, with little supporting infrastructure required, and only the matter of budget.

Weaknesses: Success depends on a few key individuals and if they fail to perform or they leave the organisation, then the innovation capability dies with them. This is not a system that leverages the capabilities of all the employees and is not sustainable in the long term. This approach is not uncommon in partner-based organisations when individual partners can be ‘given their head’ to take their ideas forward. Success is mixed however, typically with successes at least equalled by failures. And unless the budget is effectively allocated and controlled, a money-pit can be created….

What does experience tell us?

I’ve worked with a number of professional service (and industrial) firms over the last ten years on innovation programmes and inidividual projects and researched many case studies in the writing of my recent book and other articles. What are the three most important lessons that I have learned?

  • It is difficult to start (or ramp-up) an innovation programme
  • It is even more difficult to sustain innovation programmes
  • You cannot underestimate the importance of committed leadership

As discussed in previous articles in this serious, innovation requires a different paradigm to the dominant one that is prevalent in professional service (and most) businesses – i.e. the focus on delivering today’s business. Establishing an innovation programme requires focus and resources pointed at developing tomorrow’s business. This is why leadership is critical to its success. AXA Insurance (Ireland), IBM, PWC, Allianz Insurance plc and the law firm RPC all provide examples of successful innovation programmes where the senior management personally championed and were active in the programmes.

But the starting of innovation programmes benefits from the ‘excitement of the new’ which can help gain initial support, resourcing and involvement. Existing innovation programmes do not benefit from such enthusiasm, which is typically eroded over time, and it is often a struggle to maintain and progress them. These programmes must be kept fresh – through new focus themes, new champions, innovation competitions and rewards, for example.

But most importantly innovation must be embedded in the fabric of the firm – as part of ‘the way we work here’. This means strategy, budget, good people, time, management, measurement and rewards need to be allocated to innovation on an ongoing basis. In effect, professional service firms need to establish something similar in purpose (though not necessarily in structure) to the Research & Development (R&D) function that exists in industrial firms to enable an ongoing focus on innovation.

So what approach is best for taking innovation forward in your firm? My experience leads me to recommend a pragmatic approach that is the hybrid of the above:

  • Work to establish the required infrastructure – a system of innovation – whilst building involvement and gaining demonstrable results (thus maintaining management support and increasing employee buy-in).
  • Employ opportunistic approaches that make use of the energy and capabilities of key personnel acting as innovation champions.
  • Build on any ‘burning platforms’ that are available and help legitimise the need for the innovation programme.

In the final article of this series I will identify the typical challenges that firms face in seeking to improve their innovation capabilities and the approaches that are helpful in sustaining innovation into the longer term.

References and further reading

This article and the others in the series are based on the approaches, references and case studies detailed in my new book ‘Innovating professional services – transforming value and efficiency’ published by Gower in May 2015. This provides in-depth coverage and case studies of the topics featured in this series. For more information go to: http://www.codexx.com/2015/innovating-professional-services-new-book/

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Energizing Change

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